Tax Glossary

Below is a Danish glossary list with English translations and explanatory texts to key taxation terms.  

  • A-indkomst (A income): A income is income such as pay, unemployment benefits, state education grants (SU) etc. on which A tax is withheld.
  • A-skat (A tax): The tax which is charged on A income, i.e. your ordinary income. Your employer will calculate your A tax based on your withholding rate.
  • Arbejdsmarkedsbidrag (Labour market contribution): All working citizens must contribute a labour market contribution at a rate of 8 per cent. The contribution is deducted from your gross pay after ATP has been deducted and before other allowances are deducted. Your tax is then calculated.
  • ATP, Arbejdsmarkedetstillægspension (Labour Market Supplementary Pension Fund): All employees between the age of 16 and 66 will pay to this pension scheme. The amount is deducted from your full pay (gross pay) before your tax is calculated.
  • B-indkomst (B income): B income is income which has not been taxed when paid to you. B income may be fees or profits from self-employed business activities and interest receivable. Such income is subject to B tax. B taxes are normally paid in up to 10 instalments by means giro transfer forms received from SKAT. For a number of taxpayers, however, the B tax is included in the calculation of the withholding rate
  • Fradrag (Allowances and deductions): The allowance corresponding to the pay period is deducted before the tax is calculated. From your tax card, your employer can see what your allowances and deductions are.
  • Ferie (Holiday): All employees will usually be entitled to holiday. This means that in addition to your pay, you will receive 12.5 per cent which is deposited into a holiday account and paid to you when you go on holiday.
  • Forskudsopgørelse (Preliminary income assessment): each year in November, SKAT generates a preliminary income assessment of your expected income for the following year. You should update your SKAT data if your figures are not correct.
  • Løn (pay):Could also be stated as “honorar”(fee), “indtægt” (income) etc. Your pay is usually stated at the top of the payslip, and the amount is your full pay before tax is deducted. At the bottom of the calculation the following is usually stated: “Løn til udbetaling” (Pay for disbursement), showing the actual amount that you will be paid.
  • Selvangivelse (Preliminary income tax return): from February you can make changes to the data which is in your online tax folder. You will see the tax that has been calculated for the previous year and what tax allowances and deductions have been taken into account. Make corrections if necessary.
  • SP, Særlig Pensionsopsparing (Special Pension Savings): All employees must usually pay a SP contribution of 1 per cent.
  • Årsopgørelse (Annual tax statement or tax assessment notice): from March you will be able to see your annual tax statement for the previous year. Corrections should be done latest by May 1.

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